by Bryce Edwards

24 July 2012

NZ Politics Daily - 24 July 2012

$112 per head may be the price we all pay for economic nationalism in the asset sales policy. Or, rather, it is the price for we all pay to placate wavering National voters concerned about foreign ownership. The actual figure for the ‘kiwi-first’ component of asset sales is unknown – $112 is based on Treasury’s $500 million upper estimate (see Adam Bennett’s $112 a head for asset loyalty), but opposition parties are claiming it could be over $1 billion. John Key calls that a ‘crazy number’ and says Parliament's finance and expenditure committee estimate of $360 million was a ‘possible number’ – see: Vernon Small’s Key denies $1b taxpayer 'sting'. Key has also suggested today that the ‘kiwi-first’ policy is likely to cost between $60 and $80 million. That’s a big variation in estimates, but a significant cost under any scenario, particularly for a government that has argued foreign investment in New Zealand should be viewed positively and flew in the face of public opinion to allow the Crafar farms to be sold offshore. [Read more below]

Rod Oram says there is evidence that long term shareholding will be increased (listen to Oram on RNZ’s Nine to Noon this morning: Retail incentives for the SOEs sales), but the timing lends itself to a cynical view of the motivations according to Labour’s Clayton Cosgrove: ‘The next election is two-and-a-half years away and the bonus shares will be triggered after about three years…. This is a con, and the only reason for it is John Key wants to go to the country and say “look, all these Kiwis are holding onto their shares” in the run-up to the next election’ – see Share loyalty scheme is a con, Labour says. The Government has largely failed to convince most voters that the sales are a good deal for the taxpayer, and the added costs of the loyalty scheme won’t help. Nor will the recent 29% increase in Mighty River Power’s sales – see James Weir’s Sales jump for Mighty River Power.

The focus has clearly shifted to the wider benefits that having hundreds of thousands of new investors will bring, echoing Margaret Thatcher’s vision of a ‘property owning democracy’. It was a politically powerful stuff – so much so that British ‘new’ Labour embraced much of the same language. Home ownership was the main focus then, but as home ownership in New Zealand has been on the decline for some time, blue-chip utility shares are the next best thing. The actual numbers of new share owners is politically less important than having middle ground voters feeling they could be included in the benefits and that this isn’t just about large foreign corporations. On the left these are traditionally labeled ‘two bob tories’ – middle and low-income individuals who vote against their actual economic interests because they believe it enhances their social status by association.

In fact, Paul Buchanan labels the ‘kiwi-first’ purchase option, Market-oriented social engineering. He points to John Key’s statement that it’s being done to ‘change the investment psychology’ of New Zealanders, and Buchanan ponders ‘how is that different from campaigns to get people to stop smoking, not drink and drive, use public transport, practice safe sex, license and desex their pets or stop littering?’

This is alarming some investment advisers who are worried that novice buyers may think the shares are ‘money for jam’ without even knowing how much they will cost (see Newswire’s Share float plan gets tick from fund managers), and without considering other more profitable options such as paying down mortgage debt – see RNZ’s Get advice, newbie investors in state assets told. Stephen Franks points out that there are no sure bets when buying a slice of a business – see: “Should I invest in that power company?”. Of course, if the government actually wanted to maximise the number of local investors directly benefiting from the shares it would prioritise Kiwisaver funds rather than individuals.

In all, however, the Government will be pleased with the media coverage of their conference and the policy announcements. Richard Long (Why the Nats are smiling) sees the sunshine emerging for the Government after quite a few months of stormy weather, as does Mark Blackham (The word of the week is: determined), although he warns the buzzwords could degenerate in to a self-deluding feedback loop. That is pretty much the view of one conference delegate who thinks the party is failing to face up to the realities of the next election – see Cameron Slater’s National Party conference debrief.

Using the number of protestors who turned up to SkyCity on a rainy winter’s day as a barometer of the Government’s prospects may be a little shallow and inconsistent writes Gordon Campbell – see: On the media’s sales job on asset sales.

Other important or interesting political items today include:

• The latest example of political parties blatantly using parliamentary funds for campaigning and market research is explained by Vernon Small in Key uses taxpayer cash to poll voters. As usual, sending out such letters to voters and eliciting political information from them is probably well within the rules. The point, of course, is that these rules about using taxpayer resources have been designed by the politicians themselves to suit themselves.

• A ‘cursory look’ should be enough to establish if there is anything untoward in a minister’s decision to grant funding, which officials had previously declined, to a friend’s project – see: Kate Shuttleworth’s PM to look into Nick Smith payments. The funding included Restaurant and bar charges of $5,495 for three meetings which David Kennedy thinks would be a better place to start reducing taxpayer spending on food than Paula's Food Parcel Proposal. He raises concern that supermarket provided food parcels may help supermarket profits more than the nutritional needs of beneficiaries.

• TV channels that can’t support themselves with advertising are not worthy of public funding, but apparently the need for a publicly funded national orchestra is not up for debate – see: Kate Chapman’s Minister rules out axing NZSO.

• Stephen Joyce clearly signaled National’s determination to push ahead with mining and drilling over the weekend and yesterday the Te Whanau a Apanui iwi clearly signaled their continued opposition to it – see: Jamie Morton’s Protesters join forces on drilling.

• If the worthy and wholesome marketing of organic food doesn’t bring a tear to your eye then the prices will says Giovanni Tiso in The Good Earth.

• The threat of legislated oblivion is motivating a number of Pokie trusts to up their game reports David Fisher in MP keeps heat on pokie trusts.

• Finally, this may well turn out to be the most socially liberal Parliament in our history, especially on some controversial issues with marriage and adoption equality and now euthanasia potentially on its agenda – see: Katie Bradford-Crozier’s Euthanasia may again test our politicians.

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NZ Politics Daily - 24 July 2012

$112 per head may be the price we all pay for economic nationalism in the asset sales policy. Or, rather, it is the price for we all pay to placate wavering National voters concerned about foreign ownership. The actual figure for the ‘kiwi-first’ component of asset sales is unknown – $112 is based on Treasury’s $500 million upper estimate (see Adam Bennett’s $112 a head for asset loyalty), but opposition parties are claiming it could be over $1 billion. John Key calls that a ‘crazy number’ and says Parliament's finance and expenditure committee estimate of $360 million was a ‘possible number’ – see: Vernon Small’s Key denies $1b taxpayer 'sting'. Key has also suggested today that the ‘kiwi-first’ policy is likely to cost between $60 and $80 million. That’s a big variation in estimates, but a significant cost under any scenario, particularly for a government that has argued foreign investment in New Zealand should be viewed positively and flew in the face of public opinion to allow the Crafar farms to be sold offshore. [Read more below]